Message from discussion
To David Friedman: Antitrust
From: "Vincent Cook" <Use-Author-Address-Header@[127.1]>
Subject: Re: To David Friedman: Antitrust
Date: 1998/05/07
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[By the way David, I enjoyed your TV appearance with Ed Meese]
David Friedman, replying to Jimbo Wales, wrote:
>>In the _opening page_ of chaper 1 of _Capitalism_ (the cited work), Rand
>>wrote: "It is philosophy that defines and establishes the epistemological
>>criteria to guide human knowledge in general and specific sciences in
>>particular. Political economy came into prominence in the nineteenth
>>century, in the era of philosophy's post-Kantian disintegration, and no one
>>rose to check its premises or to challenge its base. Implicitly,
>>uncritically, and by default, political economy accept as its axioms the
>>fundmental tenets of collectivism."
>
>Hence Rand had her dates right, whether or not her description of the
>intellectual history is right. Thank you--that answers my question.
If one applies the term "political economy" narrowly to refer
specifically to the British classical school and not to economics in
general, then it is fair to say that Rand got her dates correct. It
seems much more plausible, though, to argue that it was Hume (and
to a lesser extent Smith's predecessors in the Scottish
Enlightenment) and not Kant who created the intellectual atmosphere
that permitted a Bentham and a J.S. Mill to sneak egregiously
collectivistic ideas into classical political economy.
Economics was quite prominent in France and even in Scotland long
before Kant or Smith. While the usual mythology is that Smith
and Ricardo founded modern economics, that honor really belongs to
Richard Cantillon. His treatise written sometime around 1730,
_Essai sur la nature du commerce en general_, is the first work to
demarcate the field of economics and give a systematic treatment of
the theory.
Cantillon wasn't alone either. The Physiocratic school and the great
theorist Anne Robert Jacques Turgot were active in France well before
Smith, and Smith's predecessors in the Scottish Enlightenment
(Gershom Carmichael and then Francis Hutchenson) bequeathed their own
body of economic theories (albeit less sophisticated, less
comprehensive, and less laissez-faire in their conclusions than the
French) to Smith.
What Smith really did was import a few French theories (but
unfortunately not some of the more advanced conceptions of value)
into the Scottish context, and thus introduce the English-speaking
world to some laissez-faire ideas in a watered-down form. Of
particular importance was Smith's advocacy of free trade in
international commerce, which has become a sort of holy grail of
British political economy (even in its more collectivist variants)
ever since.
However, unlike some of the French, Smith's pro-capitalist stands
were not integrated in a coherent fashion to offer a rigorous
defense of laissez-faire, so he wound up advocating a long list of
interventionist measures instead - specifically banking regulation,
a government monopoly of money, public works, a government postal
monopoly, agricultural export restrictions, mandates for certain
aspects of real estate (fire walls, mortgage registration), and
prohibition of wages-in-kind. Smith also was in favor of many kinds
of taxes.
I have stressed that the corruption is associated with
*British* political economy because economics in the
Catholic countries on the continent remained strongly individualist
and non-Smithian (J.B. Say being an important transmitter of this
tradition). Of particular importance later in the 19th Century were
the developments in Austria, which became the homeland of
the individualist variant of marginal utility theory and the bastion
of the anti-Marxist/anti-positivist methodology in economics.
Indeed, the magnificent performances of the Austrian economists Eugen von
Bohm-Bawerk in refuting Marxist economics and Carl Menger in challenging
German historicism casts strong doubt on the contention that no one
rose against collectivism in the 19th Century. The problem was that
the Austrian challenge didn't really have much impact in England and
America, where linguistic barriers and a lack of translations kept
English-speaking economists in a state of intellectual isolation
from the real debate.
Most economists today are still largely unaware of the ideas of the
early Austrians and of the pre-Smithian body of economic theory. The
Smith-as-founder myth became entrenched because the post-Revolution
French economists, starting with J.B. Say, found it politically
expedient to distance themselves from their 18th Century predecessors
(who were pro-royalist reformers, with Turgot even being Minister of
Finance briefly) and portray themselves as Smithians instead.
--
Vincent Cook <xyzepicu...@xyzcreative.net> Remove the xyz's
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